As the highly anticipated “Brexit” referendum approaches this Thursday, markets could see ongoing volatility. Now that the latest FOMC meeting is out of the way, this key vote is likely to garner the majority of financial headlines this week.
While the two sides in Great Britain have traded time as the front-runner, the election could be very close and markets may be on edge until a clear winner is determined. While a vote to remain in the EU may calm markets in the short-term, the reality is that this is an issue that could come up again in the future.
If the people of Great Britain vote to leave the EU, no one can say with any certainty just how global markets might be affected. Investors do not like uncertainty, however, and in uncertain times may flock to hard assets like gold, silver and other precious metals. Gold has seen some significant buying interest in the weeks leading up to this important vote, and could potentially see even heavier inflows if a decision by Great Britain to leave the EU is reached.
Just how might an exit vote affect the U.S. economy?
American businesses employ over a million people in Great Britain. The United States is the largest investor in Great Britain and the nation is seen as a key conduit for U.S. business in Europe. Should the nation vote to exit the EU, U.S. businesses could lose faith in the union and could even elect to move European operations to other locations.
Of course, this would cost money and affect profitability.
If the nation decided to leave, it would then have to work out new agreements with global trade partners-a process which would not be accomplished in weeks or months but years.
Peoria, Illinois-based Caterpillar is a great example of the potential magnitude of an exit vote.
The company employs 9,000 people in Great Britain in several plants which serve as an easy export point for the rest of Europe and other locations. A vote to leave the EU would certainly affect the company’s operations across Europe and in other parts of the world. Considering that roughly 25 percent of Caterpillar’s sales come from Europe, any undermining of that business could have a swift and dramatic effect on Caterpillar’s bottom line.
Caterpillar is just one of hundreds-if not thousands-of U.S. business that have a lot to lose if an exit vote is reached.
The disruption in operations could potentially lead to lower stock prices and layoffs. Needless to say, these issues can quickly spread to other areas of the economy.
Some have described the “Brexit” vote as insane.
The reality is that such a vote could potentially have devastating consequences for global financial markets.
These consequences would also come at a time when the European Union is continuing to struggle with economic hardships and the global economy is already dealing with a significant slowdown.
UK investors have already pulled large sums of capital out of markets, and this trend could potentially continue.
Equity markets could get hit hard.
The pound could potentially see a significant slide and currency markets could see massive volatility.
The spillover would be felt around the globe, and U.S. markets would not be immune to its effects.
Are you prepared?
Now may be the ideal time to consider physical, hard assets like gold and silver. These key precious metals have been considered a reliable store of wealth and value for thousands of years. These assets may potentially appreciate in value during times of economic or geopolitical uncertainty.
With the current global slowdown, a potential “Brexit” vote and little further guidance from the Fed on interest rates, times don’t get much more uncertain than this.
Some have described an exit vote as the next Lehman Brothers moment.
Take steps now to try to protect your hard-earned assets. Consider an allocation in physical gold or silver. It’s as simple as picking up the phone.
Speak with an Advantage Gold account executive today. Our precious metals professionals will show you just how easy it is to begin acquiring physical gold or silver, and can even show you how to buy these precious metals using your IRA account.
Don’t wait for a stock market crash or the next financial crises before taking action. Call us today at 1-800-341-8584.Tags: advantage gold, brexit, economic collapse, european union, exports, gold, great britain, pound, stocks selling off, vote